Allen Stanford’s Ex-CFO James Davis Gets 5-Year Sentence

Former Stanford Financial Group Co.
finance chief James M. Davis was sentenced to five years in
federal prison for his role in a 20-year, $7 billion
international fraud scheme.

U.S. District Judge David Hittner in Houston also sentenced
Davis, who faced as long as 30 years in prison, to three years
of post-release probation. The court also imposed a $1 billion
money judgment against Davis.

Prosecutors had sought a 10-year term for Davis, 64, who
pleaded guilty to felony charges in 2009 and testified against
financier R. Allen Stanford, who is serving a 110-year sentence
in a federal prison in Florida. Davis’s attorney asked the judge
to cap the sentence at four years, citing his client’s
cooperation and early acceptance of responsibility.

“I’m not here telling your honor that Mr. Davis was a
saint,” the attorney, David Finn, told Hittner today. “From
our first meeting he has been remorseful, contrite and has tried
to make amends for the harm he has done.”

Stanford’s business empire included the Antigua-based
Stanford International Bank Ltd. which offered certificates of
deposit and the Houston-based Stanford Group Co. brokerage that
sold them. In a trial before Hittner last year, Stanford was
found guilty of lying to investors about what the bank was doing
with their money. Jurors found he had used more than $2 billion
of it to finance a lavish personal lifestyle of private jets,
yachts and mansions.

17,000 Victims

The scheme victimized more than 17,000 investors in the
U.S. and elsewhere in the Americas. A federal court appointed
receiver in a civil case filed against the bank in February 2009
this month asked for permission to begin distributing
$55 million of the money recovered, representing about one
percent of the estimated $5.1 billion lost.

Stanford is appealing his conviction.

Davis was the second-highest ranking member of the Stanford
organization. He and Stanford roomed together while they were
students at Baylor University in Waco, Texas. He pleaded guilty
to conspiracy to commit wire, mail and securities fraud; mail
fraud; and conspiracy to obstruct a U.S. Securities and Exchange
Commission probe.

“I’m ashamed and I’m embarrassed,” Davis told the judge
today. “I’ve perverted what was right and did wrong. I hurt
thousands of investors, I betrayed their trust, also that of
associates, neighbors and friends, my family and this court and
this country. Everything that I was part of, I failed them and
I’m sorry.”

Trial Testimony

Davis testified for 10 days during Stanford’s 2012 trial
and for several additional days in the subsequent trial of the
two top-ranking accountants in Stanford’s organization, who were
also convicted.

Prosecutor Jason Varnado today cited that testimony and
Davis’s investigative assistance in asking the court to impose a
sentence of 10 years.

“Mr. Davis’s cooperation was outstanding,” Varnado said.
“This cooperation is what we want to encourage. His sentence
should reflect his model.”

The judge concurred, saying the punishment would reflect
Davis’ early surrender and his effort to “educate the
government.”

Hittner said he would recommend Davis be sent to a U.S.
prison camp near his Memphis, Tennessee, home and gave him 60
days to surrender.

CIO Sentence

Stanford Chief Investment Officer Laura Pendergest Holt
last year was sentenced to three years in prison after pleading
guilty to obstructing a U.S. Securities and Exchange Commission
probe.

The accountants, Gilbert Lopez and Mark Kuhrt, were found
guilty in November for their roles in helping hide the fraud.
Their sentencing is set for Feb. 14.

“It seems like nothing,” Angela Shaw, an advocate for
Stanford investors, said of the five-year sentence after
attending today’s hearing. Still, she said, Davis appeared to
show remorse. “It seemed real, unlike everybody else in the
case.”

The case is U.S. v. Davis, 09-cr-335, U.S. District Court,
Southern District of Texas (Houston).

To contact the reporters on this story:
Laurel Brubaker Calkins in Houston at
laurel@calkins.us.com;
Andrew Harris in Chicago at
aharris16@bloomberg.net